SEIBU RAILWAY CO. LTD. History

Company History:

Seibu Railway Co. Ltd. (Seibu Railway) is one of Japan's leading railway operators and the nucleus of the Seibu Railway Group of companies, whose interests range from railways to real estate development and hotel operation to the ownership of one of Japan's leading baseball teams. The company operates several of the busiest commuter railway lines in Tokyo, originating from the downtown stations of Shinjuku and Ikebukuro and stretching into the commuter belt suburbs. The company's revenue from the railway is gradually increasing, while its real estate ventures both in Japan and overseas are a high-growth area.

The origins of Seibu Railway lie in a railway company called Musashino Railway Company, founded in 1912 by one of Japan's most famous entrepreneurs, Yasujido Tsutsumi. He was a Tokyo-based businessman who was seeking to profit from Japan's fast-growing economy. In 1872 Japan's first railway was opened, providing transport between the cities of Yokohama and Tokyo. The ensuing 40 years saw Japan industrialize at a fast pace. The government's policy was to encourage private investors to develop the infrastructure, and it became apparent that the electric railway would be the dominant form of public transport in the Tokyo area. The government began awarding licenses to investors who wished to develop and build track along major routes. Tsutsumi obtained a license for the construction and operation of an electric railway between Ikebukuro in cental Tokyo and the outlying town of Tokorozawa. The government, as it had done with all the private railways, issued guidelines on the fares that could be charged. Tsutsumi succeeded in raising ¥1 million in capital for the company, Musashino Railway Company (Musashino). Construction began in 1912 and was completed three years later, when passenger services between Ikebukuro and Hanno, on route to Tokorozawa, commenced. The initial trains were steam-driven, as the 44-kilometer route was not electrified. Electrification took place in 1922, and the track was extended to Tokorozawa. In the following year, however, the Tokyo area experienced a catastrophic earthquake, with devastating consequences for the infrastructure. Large portions of the Musashino track were ruined, and reconstruction took over a year. Musashino, and the city of Tokyo in general, recovered quickly, however, and by 1927 the company was able to open a new service between the city of Nerima, near Tokorozawa, and Ikebukuro. The service was double-track, permitting trains to run more frequently.

By 1930 Tokyo was one of the largest metropolitan areas in the world, with a population of over three million. The agricultural areas surrounding the city gradually became residential as the city grew. To a large extent the growth was most pronounced in the vicinity of major rail routes, and Musashino saw steady housing development along its two routes. This meant a growth in passenger volume and revenue. The company continued to invest in track, converting all to double by 1930. Branch lines were built from the main lines to cater to local residential areas. Musashino's main rival at this time was the Tokyo Express Railway Company (Tokyu), under the leadership of Keita Gotoh. Gotoh and Tsutsumi became fierce rivals, as Gotoh's strategy was to take over smaller railway companies and thus expand his empire. Indeed, by the late 1930s Gotoh's company had swallowed up almost all the private railways in the Tokyo area, one of the exceptions being Musashino. The two companies were also faced with competition from the nationally owned railway network covering the whole of Tokyo. Musashino flourished, however, and in 1940 acquired Tamako Railway Company, which had also escaped takeover by Gotoh, and with it an additional service in the vicinity of its network.

In the early 1940s Japan was preparing for full-scale war with the Allies. All major companies were ordered by the military government to play their part in this effort, and Musashino contributed by supplying railway freight cars. In 1944 Musashino's tracks were severely damaged by the bombing raids carried out by the U.S. Air Force and at the time of Japan's surrender in August 1945 its infrastructure was in need of rebuilding. Following the occupation, the U.S. command began the process of dismantling the huge Japanese industrial conglomerates that had emerged before the war. Tokyu was split up but Musashino, being smaller, was left with its routes intact. With Tsutsumi still in charge, the company became known as Seibu Railway Co. Ltd. (Seibu Railway) in 1946.

Seibu Railway began the rebuilding of its track, aided by grants from the government, which was in turn subsidized by the U.S. government. As well as rebuilding the old lines, Seibu Railway began the development of routes from Shinjuku, another major central Tokyo station, to suburban regions. The company also bought a baseball team, the Seibu Lions, in 1949. A stadium was built in the vicinity of Tokorozawa and the team soon came to dominate its league. Seibu Railway also began to develop the real estate it owned in the vicinity of its track. This became a lucrative source of income for the company, in addition to its core railway business. The company continued to invest in its infrastructure, with the 1950s being a time of extensive track expansion. The station platforms were expanded to accommodate longer trains, and the frequency of services along the major Shinjuku and Ikebukuro routes increased. In 1963 a ten-car express train service between Ikebukuro and Tokorozawa was inaugurated. In the following year the company built a large railway car depot at Koteshi, along the route, to service its rapidly growing fleet of railway cars. At that time the emphasis for Seibu Railway was on speed of service. Tokyo's population was growing rapidly, with the residential regions around Seibu's lines forming a continuous metropolitan region. The majority of the residents commuted to work in the center of Tokyo, and the morning rush-hour on Seibu Railway's lines was becoming increasingly congested. While expanding its services, Seibu Railway was aware of the safety risks of transporting hundreds of thousands of passengers daily. In 1968 Seibu Railway's train tracking system was computerized and television monitors were placed along the lines. Tokyo's many level-crossings had long been a source of accidents, so Seibu Railway installed automatic safety systems at its crossings in 1969; as a result, fatalities fell dramatically.

Seibu continued to develop its real estate and in 1973 completed a huge underground complex in Ikebukuro Station. This complex included shops and restaurants as well as Seibu Railway's terminals. The development of Shinjuku Station followed in 1974. In 1976 Seibu Railway completed the building of the Seibu Shinjuku Building, its first major piece of real estate near Shinjuku Station. Toward the end of the 1970s Seibu Railway installed a computerized switching system. The company also invested heavily in station improvement, building new stations, including Tamako Station in 1961, and renovating others.

With a large stake in the ownership of the company, Yasujido Tsutsumi's family was one of the wealthiest in Japan. Although the ailing Yasujido died in 1989, he had passed control of the company over to his son Yoshiaki in the 1970s. Seibu Railway's traditional rivalry with Tokyu had diminished as both companies grew into diversified conglomerates. The 1980s saw Seibu Railway diversify into resort development, beginning with a project on the Hawaiian island of Maui in 1987. The company continued to develop family homes along its railway lines. In the late 1980s, with the boom in Japanese real estate prices, the leasing of Seibu Railway property in central Tokyo became lucrative.

In the early 1990s Seibu Railway ranked fourth behind the Tobu, Tokyu, and Odakyu Railway Companies in terms of passenger volume among private railway firms in the Tokyo area. Seibu Railway's railway business continues to be the core of the business, although in percentage revenue terms it is on a par with the company's resort and tourism businesses. The latter account for around 40% of revenue each, with the remaining 20% coming from real estate. The company's baseball team has been extremely successful, winning the Japan Series three years in succession in the late 1980s. Yoshiaki Tsutsumi, who became chairman in 1989, intends to continue to diversify his company, having opened two large hotels in Hawaii and Yokohama in 1990. The core business of railway operations will provide the base from which Seibu will expand.

Principal Subsidiaries: Seibu Bus Co., Ltd.; Seibu Hire Co., Ltd.; Seibu Transport Co., Ltd.; Izu Hakone Railroad Co., Ltd.; Omi Railroad Co., Ltd.; Seibu Travel Co., Ltd.; Seibu Lions Co., Ltd.; Seibu Golf Co., Ltd.; Prince Hotel Co., Ltd.; Kokudo Planning Co., Ltd.; Seibu Construction Co., Ltd.; Seibu Materials Co., Ltd.; Seibu Real Estate Co., Ltd.; Seibu Amusement Parks Co., Ltd.; Seibu Trading Co., Ltd.

Source: International Directory of Company Histories, Vol. 5. St. James Press, 1992.

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